MealPal gobbles $20M for its restaurant meal subscription service

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We’ve seen a huge wave of food-on-demand startups hit the market in the last several years: those who deliver restaurant food (like Postmates or Deliveroo), those who deliver meal kits to you (like Blue Apron), those who bring groceries (Instacart), and those who are building machines to help you eat better at home (eg June) are just a few of the variations on the theme that have come (and gone).

Now, in one of the latest variations, a startup called MealPal has built a platform and service to let users “subscribe” to a list of restaurant take-out lunches and dinners, and today it’s announcing a healthy $20 million in funding to fuel its growth in markets where it is active today — the United Kingdom, United States, Canada, and Australia — and to expand to new ones like France.

The Series B is being led by Menlo Ventures, and prior to this the company had raised $15 million from Bessemer Venture Partners, Comcast Ventures, Haystack and NextView.

I know what you’re thinking. “But Ingrid! There are SO MANY restaurant food-on-demand businesses out there already. What can possibly be different here?” Well, the answer is quite a bit, and the differences might just be what will help MealPal rise above the rest.

For a fixed fee — $6.49 or $6.99 for dinner in the U.S.; $5.99 or $6.39 for lunch; £4.50 or £4.99 in the U.K. all based on frequency of use — consumers get a selection of restaurants from which to order take-out. Each restaurant offers one dish only. You select what you’d like to eat, and a time when you will go by to pick up your food — with no delivery option. When you show up, it’s there, and you leave to eat it elsewhere — most likely at your office.

The lack of delivery, and the way it limits your options to just one meal from each restaurant, are two differences between MealPal and much of what you have on the market today.

Here are two more: co-founder Mary Biggins says that today the company actually makes a margin on each order (that is, it’s not taking a hit just to grow). And it’s using a ton of technology to help restaurants reach their holy grail: to help predict what people will want to eat, when they will eat it, and how much they will eat — all before the customers have even put in their orders.

The lack of delivery seems almost sacrilegious to me, given that it seems you can have anything delivered today, and that many consumers seem to have come to expect that level of service in any kind of meal-on-demand model.

“We are focused on a different audience,” Biggins told me, simply identifying the office worker as MealPal’s basic unit of measurement.

“The routine we’re targeting is, how you are getting your launch on a regular basis? We’ve been focused on the balance between convenient and affordable. Most can’t spend $10 to $15 per day on lunch, but something like what we have can be your go-to on a daily basis. You can access it regularly without paying too much.”

She also highlighted another fact that may be lost on the masses who have happily accepted bought-in meals or on-site canteens in exchange for them working more hours: it’s actually nice to get away from your desk sometimes.

By cutting out the delivery, of course, Biggins and her cofounder Katie Ghelli have cut out a major operational pain point: logistics and a labor force to power them, which not only need to be organised but accounted for on the balance sheet. (That is to say, logistics are expensive, and often the falling-down point of many an e-commerce service.)

“We are not focused on the delivery space,” she said. “We are focused on making the value proposition really appealing to consumers…We think there is a big opportunity there,” she said.

And indeed there seems to be: the company has to date delivered 3 million meals since launching 18 months ago, and has done so with some margin.

While Biggins would not spell out what kinds of fees are charged to restaurants, she did give some detail of how it works.

MealPal pays a flat fee to restaurants for each meal that is prepared and ordered.

“We have spent a lot of time trying to understand the unit economics of our business. We have priced it competitively but also to sustain the business over the long term,” she said, “and we’re not losing money on each order.”

Interestingly, predictive modelling in marketplaces is something Biggins has had experience with before. Prior to MealPal, she had been the co-founder of ClassPass, the platform that let fitness, yoga and other work out enthusiasts to select classes on a flat-rate platform.

A key element for MealPal is its effort to calibrate its service is its technology and customer relations. Given that MealPal’s model is not the traditional one that restaurants have for takeaway services — which are usually based around longer menus where anything and everything can be ordered — Biggins and Ghelli have had to go through some educating with their restaurant customers.

“One of the things has been to understand how restaurants operate,” Biggins said. “The biggest expense for them is labor costs, but because they are making only one meal per day for MealPal they are able to make it much more efficient.” Unsurprisingly, it turns out that making 100 orders of the same dish is far cheaper and easier to do than 100 orders of 100 different dishes. “Essentially, we are helping them build catering orders.”

Then, to help the restaurants figure out what to make, MealPal turns to its analytics.

“We collect data from consumers to decide what they like and don’t like. We are able to tell what’s most likely to be ordered in certain markets and on certain days,” she said. They also monitor customer ratings and feedback to restaurants what they might need to change in a serving. “We use that to help restaurants figure out how to put together their meals.”

Not unlike Uber’s or Lyft’s modelling that these transportation companies use to help predict where they should pool cars for ride hails at certain times of days in different cities, MealPal is changing a lot of the thinking about how restaurants approach their business and organization.

What’s interesting is that the system appears to be growing smarter: originally Biggins said that people had to put in orders by 9:30 in the morning, but now they can order in real-time because so much has already been pre-planned and predicted in the back end.

Because of that, the company is now expanding. In New York, MealPal is now offering dinner orders, too. I also asked — but she declined to say specifically — about how MealPal might expand how it manages food and eating on the customer side, too.

There are many ways this could go, though: a user who is trying to eat less meat could, say, use MealPal to help track what she’s ordering and nudge her to one option over another if she is straying away from her goals. “We are constantly tinkering,” said Biggins about the algorithms and options for what MealPal can offer.

“MealPal’s unique pick-up model is shaking up the food service industry, improving mealtime for both consumers and restaurants alike,” said Venky Ganesan, managing director at Menlo Ventures and MealPal board member, in a statement. “Their lunchtime success and ability to secure such a large subscriber base in a short amount of time gives us full confidence in their expansion into dinner and into further cities globally. We are thrilled to partner with Mary, Katie and the team as they continue to thrive in this competitive space.”